• by Wayne Friedman , November 2, 2023

Roku surprised Wall Street investors by overdelivering with a 20% rise in third-quarter revenue results -- including unexpected video-advertising growth, which has been outperforming both overall and linear TV advertising markets.

Roku's stock price soared 18% in after-market trading to $70.70.

"Platform" revenue -- of which a large part comes from advertising -- sharply grew 18% to $789 million in the period, with the company crediting late third-quarter gains, noting a strong overall September.

In addition, Roku says, advertising spend through third-party demand-side platforms (DSPs) contributed to these positive results -- with more than 30 programmatic partners integrated into Roku ad buying/planning system.

Although the company says consumer packaged goods and health/wellness advertising categories continue to improve, the financial-services advertising category remains challenged. 

Roku's "Device” segment -- which comprises set-top boxes and smart TV sets -- also moved up sharply, 33% to $125 million.

The company expects much of the same in the fourth quarter, with guidance that revenue will grow 10% overall to $955 million. Roku expects a continuation of video advertising rebounds similar to the growth it had in the third quarter.

Roku grew 2.3 million monthly active accounts from the second quarter to now total 75.8 million -- similar to the additions in the third quarter a year ago.

Total streaming hours were up 21.9% in the period, with the average active account 4.9% higher. The Roku Channel reached nearly 3% of total U.S. TV streaming in September, according to the company’s reading of Nielsen measurement.